NCPA - National Center for Policy Analysis


September 8, 2004

As part of the goal to implement private sector-type practices to housing authorities, the Bush administration has mandated a new formula for calculating the allocation of the federal government's housing subsidies.

The new formula, which begins in 2006, will replace an existing method that has been used for the past thirty years, where lump sum payments were given to housing authorities with little regard for actual expenses. The new rule requires documentation for expenses incurred. As a result, many housing authorities will gain funds, but some will lose:

  • About 4 out of 5 housing agencies will gain funds over the next 2 years.
  • Texas and Florida will lead the southern states with gains of at least 50 percent; Dallas is expected to receive a 70 percent increase in housing funds, and Broward County in Florida will receive a 144 percent increase.
  • However, Nevada and Alaska are among the biggest losing states, experiencing subsidy cuts of 21 percent and 75 percent, respectively.
  • New York City will lose about $759 million, a 5 percent decrease, while Baltimore will lose $6 million, or 11 percent.

The new calculation is based on a Harvard study which calculated subsidies based on the cost of running private properties. The study recommended a more decentralized budget and management practices that are more akin to the private real estate industry. Moreover, smaller and newer housing authorities complained of being overlooked in favor of larger, older housing authorities such as New York City.

Source: David W. Chen, "South Gains the Most in a Major Redistribution of Public Housing Subsidies," New York Times, August 30, 2004.


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